Hobbs, GOP lawmakers tout wins in budget as battle to define spending ahead

Gov. Katie Hobbs picked an apartment complex on 19th Street to talk about one of her biggest wins in the fiscal year 2024 state budget: dropping $150 million into Arizona’s Housing Trust Fund. 

“Projects like Soluna (apartments), where we’re standing today, are exactly the type of developments that we can build when we invest real money into dealing with our housing crisis,” Hobbs said at a news conference on Monday morning, flanked by dozens of activists and officials involved in housing and homelessness work. 

A few hours later, Sen. Jake Hoffman, R-Queen Creek, made a case for what he said are the wins he and other Republican lawmakers got in the final budget deal. 

Hoffman spoke with members of the “Freedom Caucus” he chairs about a one-year tax rebate some Republicans orchestrated for Arizona families and criticized other lawmakers – especially the Democrats – for not contributing to it. 

The rebate, Hoffman said, is a response to inflation and will give money to families with children under 17 or dependents of other ages. The rebate gives a few hundred dollars to families per child and is capped at three children per family. 

The two media events on Monday highlighted the coming political battle to define the $17.8 billion budget that lawmakers passed, and the governor signed last week. Even if, as Hobbs has said, no side got everything they wanted in the deal, there’s still something for almost everyone to brag about – from tax breaks to spending on housing and education to hyperlocal projects that individual lawmakers selected for funding. 

In most years under former Gov. Doug Ducey, Republican lawmakers hashed out a budget deal with the Republican governor, before passing the deal through the legislature along partisan lines. That left GOP figures cheering the budget while Democrats criticized it. 

The dynamic shifted last year, when far-right Republicans held out for a leaner budget and Ducey eventually cut a deal with Democrats that included additional funding for public education. Then, this year, a budget emerged publicly last week after a surprising negotiation process that – according to most accounts – was carried out between the governor and the top two Republicans in the legislature. 

“Everybody’s going to run up their flag on what they think they got out of this,” said Chuck Coughlin, a longtime GOP strategist. 

For Hobbs, the Housing Trust Fund money, along with $60 million for homeless services, including shelters, is at the top of the list. 

On Monday morning, she was joined by Department of Housing Director Joan Serviss who called the $150 million spending package “historic.” 

The Department of Housing controls the Trust Fund and, in the past, has mainly used it to fund state-level tax credits for low-income housing developments – also known as LIHTC. 

“We anticipate these funds will be used to bolster rent and utility assistance programs, eviction prevention, and repair programs, to keep people stably housed. And to leverage public-private partnerships to bring shovel-ready projects to occupancy,” Serviss said. 

Bill Morlan, director of Central Arizona Shelter Services, was also on hand for the news conference, and praised the governor for the budget. 

“She (Hobbs) came to CASS in March, and she told us that she was going to do something about housing and homelessness in a way that the state had never done before – and man, did she deliver,” Morlan said. 

(Central Arizona Shelter Services lost a $10 million state contract earlier this year when Hobbs’ administration canceled deals that Ducey had signed in the final days of his administration. At the time, CASS officials said they were working with Hobbs to find different funding for the projects.) 

Among Arizona Democrats, the political tension has mainly been between the governor and lawmakers who aren’t pleased with the process – and to some extent the outcome – of this year’s budget negotiations. 

On the Republican side, there’s conflict over who can take credit for different projects that made it into the final budget – and who failed to pitch in for some things. 

“Every member of Arizona Legislature was given the opportunity to advocate for additional monies to go towards this rebate. But sadly, aside from the Arizona Freedom Caucus, and a handful of conservative Republicans, no one else chose to. Not a single Democrat member of the Legislature chose to support Arizona families by advocating that their allocation of state funds go towards the rebate that will benefit every single family,” Hoffman said today at a press conference. 

“I was never directly asked to participate in that program, so kind of in my opinion it was like, ‘Hey I didn’t even really know what was going on,’” Senate Pro Tempore T.J. Shope, R-Coolidge, said. He is one of the Republican lawmakers who put their allowance of budget money into other things like the Housing Trust Fund or road projects in their districts. “Especially in a rural district like mine and others, these little projects that people like to poke at are a big deal. … So, yeah, we’re going to try to help.”  

Shope added that he has no problem with the rebate of any of the other line items that Republicans prioritized. 

Some Republicans outside the Freedom Caucus – including Sen. John Kavanagh, R-Fountain Hills, and Sen. J.D. Mesnard, R-Chandler, also contributed to the tax rebate. Kavanagh said it was organized within the last month.  

Hoffman acknowledged that there are other important government functions and said he doesn’t fault his Republican colleagues for giving to them. “But to the question that was posed, if we had had the ability to give $2.4 billion back to the taxpayers, we would have been able to help not only Arizona families, but Arizona seniors and every other category that needed help,” he said. 

Hoffman wouldn’t say whether the members of the Freedom Caucus gave all of their shares of budget money to the rebate, or if some gave portions. Instead, he told our reporter, “I know your goal here is to divide Republicans. Your goal is to create some sort of hit piece and some angle you’re going to exploit.” 

As for future budgets, Hoffman said he and his colleagues will be advocating for similar policies but didn’t say if they’ll also focus on children and dependents. He did mention seniors. 

“Next year, the folks behind me, we will be advocating to give as much back as humanly possible. And we call on all of our colleagues to join us in doing so,” Hoffman said.